PM wants Oil PSUs to invest in pvt sector Nagarajuna Oil refinery

It appears that squandering of more than Rs 1.14 lakh crore of public money on the likes of Vijay Mallaya and such other Richie rich of the country who zip around the world in private jets and own more than 80 per cent of India’s wealth hasn’t quite satiated either these money bags or their promoter Prime Minister Narendrabhai Damodardas Modi. For now he is currently busy pressurizing the three public sector Oil companies to invest Rs 5405 crore of public money in a dud petroleum refinery project lying limp for last 17 years, with no takers around.

The said project is the sick private sector oil refinery Nagarjuna Oil Corporation in Cuddalore, Tamil Nadu owned mainly by the powerful Raju family which owns the Nagarjuna Group of companies whose sick fertilizer company has already been aided by the Public sector corporations under prodding from the highest quarter in the government.

A report appearing in a prominent daily disclosed that on March 29 the Prime Minister’s Office (PMO) summoned the heads of the three PSU oil companies namely the Hindustan Petroleum Corporation Limited (HPCL), Bharat Petroleum Corporation Limited (BPCL ) and the Indian Oil Corporation (IOC) and directed them to invest Rs 5,405 crore as equity for setting up the NOCL’s six million tonne oil refinery at Cuddalore in Tamil Nadu.

But the PSU oil CEOs were not impressed and declined to invest in this private venture, dismissing it as an unattractive investment. They also told the PMO officials that they were already either in the process of expanding their own refineries or establishing new ones.

The PMO then attempted to bait them by informing the PSU oil companies of the 2300 acre of land all environmentally cleared on the southern coast. Yet the BPCL considered it “imprudent” to invest in NOCL pointing out that it had already invested heavily in its Kochi refinery to expand its capacity from the existing 9.5 million to 15.5 million tonnes.

HPCL too raised its hands saying it was committed on various refinery projects including the one at Vishakhapatnam and therefore was unable to find resources to invest in any new project of similar nature.

The IOC said it had studied this proposal in 2013 and found it unviable even after the NOCL had claimed it had undergone financial restructuring through the banks writing off its existing project cost of Rs 6678 crore and said it had been approached by the NOCL and replied way back in June 2014 that the “project economics is unviable.”

But the three were given a fortnight’s time to rethink and were told this time the Prime Minister may personally speak to them.

Why is the Prime Minister taking such personal interest in reviving and resuscitating a private dud company and is pressuring the public sector entities to sink in the people’s money. What is his special interest?

The NOCL was conceived in 1999, the year the last NDA government of Atal Bihari Vajpayee became dependent on the crutches of the Telugu Desam Party (TDP) of Andhra Pradesh chief minister Nara Chandrababu Naidu, with Jayalalitha having walked out of the alliance after remaining NDA bedfellow for a year.

The strong bonding between Nagarajuna group chairman and Chandrababu and therefore the concomitant influence on the NDA government is evident from the fact that since the downfall of the NDA government the Rajus virtually abandoned the project. In April 2000, the work on the project was suspended ostensibly due to paucity of funds. Sources said that by this time no new party seemed keen on investing in the project.

Then in 2006 there was fresh attempt to revive the project and the Group announced with much fanfare March, 2012 as the deadline for commissioning the project. But by October 2011 the project was again shelved for lack of response on the part of investors. Soon thereafter in December the same year the Cyclone Thane badly damaged the tanks and the port infrastructure of NOCL. There has been no activity since then and the construction work force has left the site. Last September NOCL claimed to be negotiating a deal with NetOil of Singapore but nothing came of that too.

Then why is the Prime Minister taking such a keen interest in the private project where most private investors seem wary of treading? All we know is K S Raju’s proximity to and of Nagarajuna group having financed heavily Naidu and even BJP’s election campaign in 2014. But then so many others did too. Why bestow special favours on Nagarajuna group? And who should be held responsible if the PSU money goes down the drain? Disinvestment Minister in the earlier incarnation of the NDA Arun Shourie’s quotable quote against his predecessors was “Business is not the business of the Government.” And Modi too seemed to believe in this adage or so he said often times in his election campaign speeches. But here we have in a new avatar urging the PSUs to sink the public money on some inscrutable favourite of the Prime Minister and this at a time when the Public Sector Banks are already reeling under the loss of Rs 1.14 lakh crore siphoned of by the big business of the country, most of which done in the two years of Modi era.